Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day, we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. I'm talking about bitcoin
Speaker 1: and crypto. One of the issues and one of the challenges.
Speaker 1: I think it was an initially called out, notably by
Speaker 1: Elon Musko of Tesla, is the carbon footprint left by
Speaker 1: bitcoin mining. Our next guest thinks they have a solution.
Speaker 1: Here Paul Prager, CEO and founder of Tera Wolf. They
Speaker 1: are based in Eastern East. I'm sorry Eastern Maryland. Uh, Paul,
Speaker 1: thanks so much for joining us here. Talk to us
Speaker 1: about carbon neutral bitcoin mining. Is that even a real
Speaker 1: thing at this point? Yeah, Hi Paul here, and thank
Speaker 1: you very much for having me on. Uh. Carols is
Speaker 1: all about zero carbon missions. We've got sixty tho miners
Speaker 1: on order. It's two hundred megawatts. We have fifty megawatts
Speaker 1: of minor capacity targeted for this year, three for next,
Speaker 1: and eight hundred and their pipe and and and we're
Speaker 1: targeting zero carbon emissions. That's not sort of getting even
Speaker 1: carbon neutral, that's zero carbon emissions. Are energy resources are nuclear,
Speaker 1: power and hydro. How do you do that though? How
Speaker 1: do you get clean energy for bitcoin? So? Um so
Speaker 1: nuclear doesn't emit any carbon, and hydro doesn't emit any carbon.
Speaker 1: And I you know, the genesis of tera Wolf was
Speaker 1: my company, bail Wolf. I've been in the energy infrastructure
Speaker 1: business for almost thirty years. At its very core, at
Speaker 1: the very core, bitcoin mining is energy infrastructure. So it's
Speaker 1: the process of taking a locally produced commodity like electricity
Speaker 1: from a sustainable resource hydro, nuke, turning it into a
Speaker 1: globally traded commodity that stores value. So that's what we do.
Speaker 1: We have a power purchase agreement on the nuclear power
Speaker 1: facility in Pennsylvania, and we have a site infrastructure ready
Speaker 1: that will be online this year with hydropower coming to it.
Speaker 1: All right, So, Paul, you know, right now, the Infrastructure Bill,
Speaker 1: and here in the studio we're watching video of the
Speaker 1: Senators on the Center floor voting right now as we speak,
Speaker 1: would require miners like tera Wolf to report tax data
Speaker 1: to the I R. S that I don't even think
Speaker 1: you even have access to. What would that requirement mean
Speaker 1: for miners like you and for the crypto industry more broadly. Yeah, listen,
Speaker 1: I generally would say legislation and regulation is a very
Speaker 1: good thing for the bitcoin industry, right. It just further
Speaker 1: substantiates the legitimacy of bitcoin, So I think it's a winner.
Speaker 1: And no matter what. Second of all, I believe that
Speaker 1: there will be several bytes at proper legislation, UH to
Speaker 1: ensure that we're given responsibility these for things we can
Speaker 1: comply with. Um. I I know that they'll focus on
Speaker 1: the details as it goes into the house, but generally
Speaker 1: we like regulation. It's something again, I've been in the
Speaker 1: power business for thirty years. We've lived with their entire life.
Speaker 1: And when legislation does come, I think it's going to
Speaker 1: come along the lines of what's the energy resource? You know.
Speaker 1: I think it likely comes in the form of a
Speaker 1: carbon tax. I don't I don't think that legislation will
Speaker 1: be burdensome if you will, just because you're mining bitcoin
Speaker 1: or holding bitcoin. Legislation and regulation in the US is
Speaker 1: one thing, but it's not the only player that's regulating
Speaker 1: the crypto space. I mean in China the government banning mining,
Speaker 1: and I'm wondering how that affected your operations. I mean,
Speaker 1: I look at what China did as a crackdown as
Speaker 1: opposed to responsible legislation. UM, I think it was. It
Speaker 1: was listen net net it was. It was a great
Speaker 1: result for us. We saw the hash rate come down,
Speaker 1: so we were able to get a bigger piece of
Speaker 1: the pie if you're an early mover in bitcoin mining.
Speaker 1: Second of all, there was a shortage of miners um,
Speaker 1: and and now they're readily available and there are better
Speaker 1: prices and terms. So I think we were able to
Speaker 1: sort of get a more prominent uh position, and we're
Speaker 1: able to sort of get a bigger piece of the
Speaker 1: pie now, uh, being that we're ready to roll here
Speaker 1: as opposed to where the difficulty rate was much higher.
Speaker 1: Uh just six months ago. Did you see an influx
Speaker 1: of Chinese miners after they faned mining. Yeah, there are many, uh,
Speaker 1: you know, really good quality credit Chinese miners that are
Speaker 1: looking to come to United States. UM. There are some
Speaker 1: things though here that you have to think about. You
Speaker 1: have to have a site, you have to have uh
Speaker 1: it permitted properly, you have to have transformers, so you
Speaker 1: could step down the power. So I think again where
Speaker 1: Tara Wolf is advantages. We have these sites, we have
Speaker 1: the electricity contracted for, we have the transformers, and the
Speaker 1: sites are shovel ready, and so there's a there's a
Speaker 1: significant first mover advantage. But yeah, I think Chinese miners
Speaker 1: very much trying to come here, and I think that's
Speaker 1: good for bitcoin. Right, you're decentralizing, uh, a lot of
Speaker 1: Chinese migration to the United States, and um, I think
Speaker 1: that's all a win for bitcoin. Obviously, a lot of
Speaker 1: this does come down at the end of the day
Speaker 1: to concerns about the environmental impact. And there's a lot
Speaker 1: of conversation when we talk about investing and you know,
Speaker 1: treating our money with the environment and mine and kind
Speaker 1: of these e s G issues. There's a question of greenwashing.
Speaker 1: How do you convince people that what you're doing a
Speaker 1: Tara Wolf is not that well, you know, again, we
Speaker 1: are about zero carbon emission, so there's a big difference
Speaker 1: between what we do, for instance, and another mining company that,
Speaker 1: let's say uses a thermal resource and tries to get
Speaker 1: the carbon neutrality by buying carbon credits. We don't have
Speaker 1: carbon emissions, so it's not an issue for us. And
Speaker 1: I believe that the industry in general is very responsible
Speaker 1: and they disclose where their energy resources are coming from,
Speaker 1: and so I think that ultimately investors will pick and
Speaker 1: choose based on what their approaches. I think that the
Speaker 1: other way that will be, you know, a big factor
Speaker 1: is going to be in value. Again, we think that
Speaker 1: legislation to the bitcoin mining industry will come more likely
Speaker 1: in the form of a carbon tax, So that will
Speaker 1: drive the cost on the margins for miners that are
Speaker 1: emitting carbon to a higher level than they will for instance,
Speaker 1: for Tera Wolf. So I think at the end of
Speaker 1: the day, that's where the rubber will hit the road
Speaker 1: and people will see the difference in the value opportunity.
Speaker 1: Paul on June of this year, teara Wolf, I guess
Speaker 1: you merged with Iconics a spack. Give us an update
Speaker 1: on that transaction and kind of where you are on that. Sure, Yeah,
Speaker 1: we did a reverse combination. It's not a speck. In fact,
Speaker 1: it's a reverse merger where we merge into a currently
Speaker 1: listed company called Iconics icon x uh and we've filed
Speaker 1: our S four proxy last week. We await you know,
Speaker 1: all the customary approvals as you see everybody that needs
Speaker 1: to chop on it. And hopefully, uh sometime late in
Speaker 1: the third quarter early fourth quarter, we'll be trading on
Speaker 1: the Nastack under the ticker w U l F. Wolf
Speaker 1: very excited about. It's a great transaction. Iconics was a
Speaker 1: great company, really clean balance sheet, and so it made
Speaker 1: a lot of sense. And do you view now as
Speaker 1: a friendly time to come to the public markets? Absolutely,
Speaker 1: I mean there are there are several comps out there,
Speaker 1: so that that's a positive thing in terms of helping
Speaker 1: people sort of take a look at at at the
Speaker 1: industry and get a handle on value. I also think
Speaker 1: that if you take a look at what what what's
Speaker 1: in the infrastructure bill today, legislation means that bitcoin is
Speaker 1: here to stay. It's part of the ecosystem. It's an
Speaker 1: important part of it. It's an important generator revenue and
Speaker 1: a store of value. So absolutely couldn't be a better
Speaker 1: time for us. Well, you mentioned that infrastructure bill, Paul,
Speaker 1: and we just had the headline crossing the terminal that
Speaker 1: five hundred and fifty billion dollar bipartisan infrastructure bill has
Speaker 1: passed the U. S Senate. We understand that a Vice
Speaker 1: President Kamala Harris will gabble that vote, but again, that
Speaker 1: measure has passed. This is the first part of President
Speaker 1: Biden's long term economic spending plans, Paul. But it has
Speaker 1: passed that hurdle. Yeah, absolutely, and that's obviously important, and
Speaker 1: now we will go onto the other bigger, broader spending plan.
Speaker 1: Paul Pregor, thanks so much for joining us to really
Speaker 1: appreciate hearing that story. Paul Igor, CEO and founder of
Speaker 1: Tariff based in eastern Maryland. And again, as Kayleie was
Speaker 1: just reporting, the Senate has passed the infrastructure pack. The Senate,
Speaker 1: as we said, is voting as we speak on this
Speaker 1: UH infrastructure bill, and one of the hold ups was
Speaker 1: cryptocurrency and taxation of cryptocurrency. I did not see that coming.
Speaker 1: I was thinking about maybe they're talking about a road
Speaker 1: or a bridge that needed to be included or excluded,
Speaker 1: but no, it was crypto. UM, let's get some color
Speaker 1: on that. We welcome Meltem Demure's chief strategy officer for
Speaker 1: coin Shares Group. They have about five billion dollars in
Speaker 1: assets under management. Meltem, thanks so much for joining us here.
Speaker 1: What can you tell us about what is or is
Speaker 1: not in this legislation as it relates to cryptocurrencies. Yeah,
Speaker 1: it's great to be here, and thanks so much for
Speaker 1: having me. Look, if there's anything we've learned over the
Speaker 1: last five days, it's that lawmaking in the United States
Speaker 1: is a very complicated process that many of us, as
Speaker 1: it turns out, don't really understand so well. Um, I
Speaker 1: think that's maybe an understatement. So here's basically what happened. Um.
Speaker 1: Within the Infrastructure Bill, there were certain provisions that sought
Speaker 1: to raise tax revenue, and one of those provisions was
Speaker 1: clearer definition around what types of entities in the cryptocurrency
Speaker 1: space would be required to provide tax reporting in the
Speaker 1: form of TON ninety nine and those other documents that
Speaker 1: your broker would typically send you at the end of
Speaker 1: the year. And one of the key issues was was
Speaker 1: in the initial language and the proposed Infrastructure Bill, the
Speaker 1: definition of what constituted a broker was really really broad,
Speaker 1: so that it would include cryptocurrency developers, software developers, bitcoin miners,
Speaker 1: people operating nodes in different open blockchain network and basically
Speaker 1: the language was really unworkable, and so we saw flew
Speaker 1: of amendments that came out in the three days that followed,
Speaker 1: including an amendment um sponsored by Senator to Me, one
Speaker 1: sponsored by Senator Apartment, and another by Senator Cruise. None
Speaker 1: of those amendments were voted on the infrastructure bill passed
Speaker 1: as is. But certainly know that the House will be
Speaker 1: taking up this cause. And we don't think this issue
Speaker 1: is by any means over us as it stands. So
Speaker 1: what does it actually mean for the crypto market and
Speaker 1: crypto investors if it does indeed happen as it stands? Yeah,
Speaker 1: I think again. Um, the impact of this this bill
Speaker 1: is that it would impose a lot of reporting obligations
Speaker 1: on entities that aren't really reporting entities. A lot of
Speaker 1: activity in the crypto space is done through regulated platforms
Speaker 1: that are registered as brokers. You might know names like
Speaker 1: claim base or krack in or Gemini, all of whom
Speaker 1: are exchanges that operate here in the United States, and
Speaker 1: they're already providing tax reporting documents to their users. But
Speaker 1: under this new language, their entities like software developers who
Speaker 1: might develop an open source piece of software that's used
Speaker 1: by anonymous people on the Internet that would not be
Speaker 1: responsible for reporting. And again those individuals are not going
Speaker 1: to have any idea who's downloaded their software and how
Speaker 1: they're using it. That's the whole point of pure to
Speaker 1: pure open source software, because I think once of the
Speaker 1: challenge is really the way that the law has written
Speaker 1: and the way that this technology actually works. They're really
Speaker 1: fundamentally incompatible. And we continue to see this on the
Speaker 1: regulatory front. This is a new type of technology, and
Speaker 1: I think lawmakers in DC are really struggling to understand
Speaker 1: how it fits into the existing regulatory frameworks that we
Speaker 1: have so maltime. I know you've spent time in Washington,
Speaker 1: d C. Talking crypto to the folks down there, and
Speaker 1: I registered just today about how this whole five days
Speaker 1: maybe have illustrated the fact that the crypto industry really
Speaker 1: needs to up their lobbying game. What are your thoughts there? Yeah, absolutely, Look,
Speaker 1: a number of firms have been in Washington, D C.
Speaker 1: Over the last seven years that I've been working in
Speaker 1: this industry, and seven years doesn't feel like a lot,
Speaker 1: but for the crypto industry, you know, it feels like
Speaker 1: like a lifetime. Certainly, I think at the end of
Speaker 1: the day, there's sort of this fundamental misperception even in Washington, DC,
Speaker 1: that crypto is not regulated, which is simply false. There's
Speaker 1: an alphabet stoop of agencies from the SEC, to the CFCC,
Speaker 1: to the i r S to the CFPD who oversee crypto,
Speaker 1: who have issued guidance and continue to issue guidance. So
Speaker 1: I think what's really needed is more education and advocacy.
Speaker 1: But also I think what we're starting to see fifteen
Speaker 1: percent of Americans own some type of cryptocurrency. This is
Speaker 1: becoming an important voter issue and in the next election cycle,
Speaker 1: you better believe that there are a number of Americans
Speaker 1: who are really motivated and want to see a crypto
Speaker 1: policy platform from their elected officials. So I believe in
Speaker 1: future cycles, not only will we see more lobbying, more
Speaker 1: advocacy from the crypto industry in DC, but on the
Speaker 1: flip side, will also see more representatives more or less
Speaker 1: the officials recognizing that in order to get elected, an
Speaker 1: important part of their platform will need to be progressive
Speaker 1: policy when it comes to not just cryptocurrencies themselves, but
Speaker 1: blockchain technology and that critical digital infrastructure for America. But regulation.
Speaker 1: At the end of the day, Melton doesn't just come
Speaker 1: from Capitol Hill and from legislators. We also have you know,
Speaker 1: the Gensler SEC, and on that front, or you hopeful
Speaker 1: at all that we'll see a bitcoin e t F. UM. Look,
Speaker 1: I think that bitcoin ets this is something we're an
Speaker 1: asset manager. We don't have any products in the US market.
Speaker 1: We love to have a product in the US market,
Speaker 1: but thus far, the regulatory regime here has simply not
Speaker 1: allowed for a publicly listed e t F for e
Speaker 1: TP that tracks the underlying prices bitcoin to exist in
Speaker 1: this market. We are optimistic that in the next three
Speaker 1: to five years we will see more structured products in
Speaker 1: the US market, but we're not optimistic that it will
Speaker 1: happen in the near term. Again, I think there's still
Speaker 1: a lot of uncertainty, and we have to date no
Speaker 1: less than thirteen et F applications that have been filed
Speaker 1: and the number of mutual fund applications that are in process.
Speaker 1: Will continue to see more filings, more applications, But I
Speaker 1: think UM Chairman Gunsler of the SEC made it perfectly
Speaker 1: clear that his administrations certainly does not a plan to
Speaker 1: prove any et F or any such product construction in
Speaker 1: the near term. So I think for us, you know,
Speaker 1: the outlook we have is sometime in the next nine
Speaker 1: to twelve months might be possible, but more realistically we're
Speaker 1: looking at two at the earliest. All Right, Malton, thank
Speaker 1: you so much for joining us. We always appreciate getting
Speaker 1: your thoughts in perspective. Melton Demure's chief strategy officer for
Speaker 1: coin Shares based in London, and that et F question
Speaker 1: is really on top of people's minds, Kaylee. And as
Speaker 1: Melton mentioned, um Mr Gensler of the SEC kind of
Speaker 1: he's I think he's positive towards this, but let's take
Speaker 1: our time. It seems like he just kind of keeps
Speaker 1: punting it and punting it. Maybe a future is bitcoin ETF,
Speaker 1: Bitcoin futures ETF. Right, he kind of gave those hands,
Speaker 1: but still we wait. Paul a lot, you have a
Speaker 1: lot of demands, certainly for an e t F for bitcoin.
Speaker 1: Will follow up on that story. This is Bloomberg. Let's
Speaker 1: bring on right now. Jack Tran, CEO of James Hardy
Speaker 1: Industries based in Chicago. Dr Tron, thanks so much for
Speaker 1: joining us here. Uh give us just remind us and
Speaker 1: remind our listeners what James Hardy Industries does within the
Speaker 1: housing market. Right, So, good morning, Paul, thank you for
Speaker 1: inviting me back. James Hardy. We we are the company
Speaker 1: that transformed the way the world built by delivering more
Speaker 1: athetically beautiful, safe, and more sustainable building products that really
Speaker 1: grace the exteriors of homes across UM, the US, UM, Europe,
Speaker 1: and Asia Pacific. And we're we're about three plus building
Speaker 1: down company UM that is quite profitable and it's growing. Uh. So,
Speaker 1: obviously you have a pretty uniqu vantage point here into
Speaker 1: the housing market in the dynamics within it, given how
Speaker 1: high home prices are, how quickly houses are going off
Speaker 1: the market. Are people now just looking more to renovate
Speaker 1: the homes they're currently in than trying to buy a
Speaker 1: new one, um, Kaylee, that is a very good insight.
Speaker 1: That is correct because if we look at the new
Speaker 1: home construction in the US today, uh, it is not
Speaker 1: enough home built to meet the very big growing demand
Speaker 1: because we do have a very big group of millennials
Speaker 1: now really sought to to go into housing markets with
Speaker 1: grown family and also at the same time, we have
Speaker 1: a lot of folks now that stay at home. The
Speaker 1: Wolf from Home and said they would like to do
Speaker 1: a lot more renovation. But with with the rising prices.
Speaker 1: What that means is that a lot of homeowners want
Speaker 1: to look at how they can renovate their homes um
Speaker 1: but at the same time enhance the value of their home.
Speaker 1: So we do see a lot of activities that deal
Speaker 1: with the outdoor, how to improve the exterior of their homes,
Speaker 1: how to make their outdoor living space a lot more
Speaker 1: pleasant and yet at the same time enhance the value
Speaker 1: the home. All right, we just want to update our
Speaker 1: listeners on the vote ongoing on Capitol Hill and that
Speaker 1: five fifty billion dollar bi partisan infrastructure package. That vote
Speaker 1: is still ongoing, but we understand that the Senate does
Speaker 1: have the votes to pass that by partisan infrastructure plans.
Speaker 1: So we will continue to bring you up to date.
Speaker 1: But it does look like Paul, that measure is going
Speaker 1: to pass. Yes, that's coming in on schedule, So have
Speaker 1: more of that coming up. Dr Trong. I mean, as
Speaker 1: you take a look at going out here, I mean,
Speaker 1: how do you think about housing demand, just broadly speaking,
Speaker 1: over the next several quarters, whether it's renovation, new construction,
Speaker 1: what's your market outlook? I'll walk it outlook, and it's
Speaker 1: very robust and very wrong. Um. And what we see
Speaker 1: is the renovation market will continue to grow because a
Speaker 1: lot more homeowners would like to renovate their homes. UM.
Speaker 1: So we do see that means can be grown quite nicely.
Speaker 1: UH and certainly in new construction UH there is also
Speaker 1: a strong demand. But that is that sector a litmited
Speaker 1: more limited with the lack of skill, labor, and then
Speaker 1: to a certain degree lack of materials certain materials. Yeah,
Speaker 1: you know, we we talk a lot about supply chain
Speaker 1: constraints in the higher input costs that have resulted from that.
Speaker 1: Are you charging more for your products? We're We're not
Speaker 1: charging more as much of we are offering more about
Speaker 1: differentiated products. For example, we uh in in the Hardy
Speaker 1: brand exterior product to going to outside of the root
Speaker 1: protected homes of h of the of the house, and
Speaker 1: what we offer is of the Hardy brand products that
Speaker 1: have already been pre finished in our factory with paints
Speaker 1: and that would allow the homeowners to have different design
Speaker 1: in their homes and be able to uh to really
Speaker 1: protect their homes with very durable products aesthetically flees in
Speaker 1: product and also enhance the value of their home. UM.
Speaker 1: And that type of material is actually a lot more
Speaker 1: easy to in install and and fast to install. So
Speaker 1: essentially would provide the alternative to the homeowners relative to
Speaker 1: bricks or stuck call um that's more expensive and also
Speaker 1: slower to bill. So we we offer the alternative to
Speaker 1: to those solutions. So we saw in you know, a
Speaker 1: kind of a folks just kind of leaving urban centers,
Speaker 1: leaving the city, is going for the bourbs looking for
Speaker 1: more space. Is this a trend that you think is
Speaker 1: going to continue and we'll see that in construction trends
Speaker 1: or do you expect people to kind of come back
Speaker 1: if you will, to some of those urban centers. Um,
Speaker 1: we we do see a lot of trend moving out
Speaker 1: into the burbs. But also lately, I would say the
Speaker 1: past a few months that we do see some certain
Speaker 1: migration back into the cities is because of the affordability
Speaker 1: of certain homes out in the burbs. So it's quite
Speaker 1: move moving back and forth through It depends on the
Speaker 1: available ability of homes because there's certainly there's a lot
Speaker 1: more demand right now than the supply. Yeah. Where there
Speaker 1: also has a lot of demand is for workers. We
Speaker 1: saw with the jolt stata here in the US yesterday
Speaker 1: there's something like more than ten million jobs that are open,
Speaker 1: more than there are in fact of people unemployed here
Speaker 1: in the US. I know you have over forty dred
Speaker 1: employees globally. I'm wondering how many openings you have and
Speaker 1: if you're struggling to fill them. UM. It's certainly it
Speaker 1: is an area that that that that we also experience
Speaker 1: in the shortage of labor, and certainly in markets in
Speaker 1: the West Coast that we do, we experience a higher
Speaker 1: shortage of labor in in our facilities. UH. And you know,
Speaker 1: it's really about come coming down to having to write
Speaker 1: uh the value propriation for working at James Hardy. And
Speaker 1: it is some something that we work very closely with
Speaker 1: local communities to do really tell the story to be
Speaker 1: able to attract the right candidates into our workforce. But
Speaker 1: certainly that is UH that has been in uh in
Speaker 1: an issue that persistence throughout the whole summer for us
Speaker 1: as well. All Right, so I see your stock all
Speaker 1: time high. Just real quickly, how are your earnings? We
Speaker 1: we just reported our earnings and yesterday and it is
Speaker 1: we're very pleased with the results. Globally, our net sales
Speaker 1: increase by thirty five percent and our net income increased
Speaker 1: by and what's very pleased and here is that all
Speaker 1: three regions that we operated in North America, Europe, Asia
Speaker 1: Pacific all had double digit growth in both the top
Speaker 1: line and bottom line. And it's really a testament to
Speaker 1: not only the growing market that we operate in, but
Speaker 1: also at the same time we're able to take share
Speaker 1: in the marketplace and deliver more values to the homeowners
Speaker 1: across the world. All Right, Dr Jack Tron, thank you
Speaker 1: so much. We appreciated CEO of James Hardy Industries of
Speaker 1: strong results of just recently in the stock hitting an
Speaker 1: all time high and the growth of the housing market. Kay,
Speaker 1: we've got some wage inflation on Law Street. I think
Speaker 1: we've been reading stories really over the last month or
Speaker 1: so about you know, these new investment bankers coming in
Speaker 1: and you gotta pay him some more money and all
Speaker 1: this kind of stuff. But Mary Baker, she's a financial
Speaker 1: reporter for Bloomberg. She joins us here on a Bloomberg
Speaker 1: Interactive Broker story studio. She's got that story out today,
Speaker 1: which is really interesting. JP Morgan boost pay for more
Speaker 1: staff and not just the investment bankers, but other folks
Speaker 1: as well. Mary, thanks so much for joining us here.
Speaker 1: So who else is getting pay bumps here on Wall Street? Well?
Speaker 1: Last yesterday, sorry, um, Jeffries Group also announced that they
Speaker 1: were going to match Goldman Sachs, which announced last week
Speaker 1: that it would be paying its junior investment banking analysts
Speaker 1: hundred and ten thousands. So basically all summer um, the
Speaker 1: banks have been raising pay to a hundred thousand. But
Speaker 1: Goldman's text was kind of sitting around for a little
Speaker 1: while waiting, and the recruiters and pay control and I've
Speaker 1: been talking to said that they did that purposely and
Speaker 1: kind of waited to come. They wanted to one up everybody. Yeah,
Speaker 1: one up everyone. But now Jeffrey's Group is matching them,
Speaker 1: So that came out yesterday as well. But a lot
Speaker 1: a lot of these that we've been seeing have been
Speaker 1: for the junior bankers, the lowest people on the totem pole.
Speaker 1: What with JP Morgan, it's now expanding beyond that, right, Yeah,
Speaker 1: So basically JP Morgan announced earlier this summer that they
Speaker 1: would be paying their junior investment banking analysts more, but
Speaker 1: now they're expanding it out to other analysts within their
Speaker 1: corporate investment banking division. So that's going to include sales,
Speaker 1: trading and research analysts. It's all under the same division,
Speaker 1: but it's beyond just investment banking analysts now. So it
Speaker 1: seems like they're trying to attract more analysts, which means
Speaker 1: they're probably really busy this summer, which is what we've
Speaker 1: been seeing in terms of revenue. Yeah. So you know,
Speaker 1: when I worked on Wall Street, it was you know,
Speaker 1: obviously it was all about compensation. You started thinking about
Speaker 1: your bonus probably you know midyear, if the summer you
Speaker 1: started really started jockeying and starting to you know, pitch
Speaker 1: and everything. Um. But now more of the compensations is
Speaker 1: in salary versus bonus. So these pay increases are these
Speaker 1: are salary increases are really important. They are really important.
Speaker 1: I think analysts that any analysts are in the job
Speaker 1: market right now are looking at what the base pay
Speaker 1: will be and all summer long. I mean from what
Speaker 1: we're we've been hearing and our reporting is that Goldman
Speaker 1: Tax was saying we don't really need the razor base pay.
Speaker 1: But now they've they've come in line. I think they
Speaker 1: realize that anyone that's looking to go out and get
Speaker 1: a job as an analysis investment analysts wants to see
Speaker 1: their base pay at least a hundred thousand. They wanted
Speaker 1: to match what where the other banks are coming in.
Speaker 1: But we do think the bonuses are still going to
Speaker 1: be big this year. Yeah, the banks have a lot
Speaker 1: of money coming in. I would bet that the guys
Speaker 1: at the top are getting paid a pretty a pretty
Speaker 1: nice sum as well. How does this tale into the
Speaker 1: work from home equation? Because you're paying people more, does
Speaker 1: that mean I'm gonna want you back in the office.
Speaker 1: I'm not going to pay you more if you're gonna
Speaker 1: be sitting at home and not commuting in Well, I
Speaker 1: think the banks, each bank has a different return to
Speaker 1: work policy going on right now. I mean, we know
Speaker 1: Goldman Sax and JP Morgan want they're people back in
Speaker 1: the office. We know that helps with camaraderie, um. But
Speaker 1: we do think that the bank, sorry, the pay raises
Speaker 1: are in part to help keep the anilysts that are
Speaker 1: part working from home. It has been hard working from
Speaker 1: home from them, they've I mean, in March Goldman Sax
Speaker 1: Anilysts put out presentation outlining just how hard it's Been's
Speaker 1: kind of what started this whole thing, really, right, Yes,
Speaker 1: I mean when I was in the same group of
Speaker 1: these kids working weeks, and it was hard. That's a
Speaker 1: lot um, but you had the camaraderie of literally being
Speaker 1: in a room like this where all the analysts were
Speaker 1: in a bullpen, that's what we called the bullpen, and
Speaker 1: y'all could lean on each other and you all could
Speaker 1: go after drinks afterwards. That likely. But boy, if you're
Speaker 1: stuck at home by yourself, that would be tough. So
Speaker 1: I guess they're trying to, you know, say hey, we
Speaker 1: recognize what you guys are going through, and we want
Speaker 1: to try to help out. And one of the ways
Speaker 1: we can do it is pay more money. I guess
Speaker 1: I think that's part of it. And then they want
Speaker 1: to keep the analysts that they have on. I mean,
Speaker 1: we know that there's been a lot of churn going
Speaker 1: on within their analysts ranks, so analysts are looking to
Speaker 1: jump out of the banks sooner than when their two
Speaker 1: year analyst programs are up, so they're looking to go
Speaker 1: buy side. I've been hearing that a lot of investment
Speaker 1: banking analysts that go into the banks go in just
Speaker 1: specifically to stand for two years and get out and
Speaker 1: go buy side. As fast as they can. They want
Speaker 1: to go to private equity for as they want to
Speaker 1: go to hedge funds. They see that work is more fulfilling,
Speaker 1: more fun, kind of more like skin in the game.
Speaker 1: So that's so from all the reporting and all the
Speaker 1: people you've been talking to, do you have any reason
Speaker 1: to believe this kind of race to the top in
Speaker 1: terms of the talent competition is going to cool down anytime? Sooner?
Speaker 1: Are we going to keep talking about these stories of
Speaker 1: banks paying people more. I don't think it's going to
Speaker 1: cool down anytime soon. It seems like it's just ramping
Speaker 1: up more and more and more. Are they finding hearing?
Speaker 1: Are they finding competition offers like the tech industry, Because
Speaker 1: when I came out of business school there really it
Speaker 1: was either you go to consulting, you go to investment banking.
Speaker 1: But now technology and like the Amazon's the Apple, I
Speaker 1: mean that's a big threat too. I mean, not only
Speaker 1: are analysts leaving the banks to go to the by
Speaker 1: side firms, but they're also going in tech. They're going
Speaker 1: to startups any any place that who can pay them
Speaker 1: just as much but maybe offer them a bit of
Speaker 1: a better work life balance. I was going to say,
Speaker 1: a lot of those tech companies have, you know, the
Speaker 1: massive campuses out on the West Coast and all of
Speaker 1: the benefits working from home. It seems as more lenient
Speaker 1: for a lot of those kind of Silicon Valley players
Speaker 1: than it is for banks on Wall Street. Paul, Yeah, exactly.
Speaker 1: And I think that's gonna be a big issue. And
Speaker 1: we've seen that from you know, the business schools. They
Speaker 1: have to be uh, you know, they have to you know,
Speaker 1: get their people ready to go out to the West
Speaker 1: Coast and technology. Hey, Mary, thanks so much for joining us.
Speaker 1: We really appreciate a great story. Mary Bakert, finance reporter
Speaker 1: for Bloomberg, joining us here in our Bloomberg Interactive Broker's
Speaker 1: studio and Kaylee, it's a it's interesting, I think, is
Speaker 1: your question. Are they're going to keep raising this this
Speaker 1: these salaries. I think I'll be interesting to see when
Speaker 1: they people do come back to work and and and
Speaker 1: what that means for the work environment, because that's so
Speaker 1: important for you know a lot of these uh investment
Speaker 1: banks that do work long, long hours. Yeah, totally. And
Speaker 1: then when in terms of doing deals, are you going
Speaker 1: to be getting back on airplanes having more of that
Speaker 1: kind of grueling travel schedule. It's not just about return
Speaker 1: to the office, it's about return to the general deal
Speaker 1: making environment, because obviously that has been very different over
Speaker 1: the last year and change. Thanks for listening to the
Speaker 1: Bloomberg Markets podcast. You can subscribe and listen to interviews
Speaker 1: with Apple Podcasts or whatever podcast platform and you prefer.
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller N
Speaker 1: seventy three, and I'm fall Sweeney. I'm on Twitter at
Speaker 1: pt Sweeney. Before the podcast, you can always catch us
Speaker 1: worldwide at Bloomberg Radio.